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South Africa, Africa’s Shrinking Star?

Strategic Communications

April 9, 2014

According to official figures released this week Nigeria has knocked South Africa – ‘the gateway to the continent’ – off its perch as Africa’s biggest economy.

Max Gebhardt, Managing Director and Head of Strategic Communications for FTI Consulting in South Africa, discusses the immediate response in that country and the implications this could hold for the confidence of foreign investors.

South Africa’s response to the news that Nigeria is Africa’s biggest economy has been one of mild amusement and slightly dismissive. The underlying tone of the comments has been that it is just an arithmetic adjustment and doesn’t really change much, instead of being a threat. South Africa continues with the belief that it is the continent’s economic powerhouse because of its more advanced infrastructure and financial institutions.

Business Day, one of South Africa’s main business newspapers, described the rebasing of the Nigerian economy as nothing more than “technical”. It was, the newspaper said in an editorial, “tempting not to take Nigeria’s change of status to number one too seriously”. It pointed out that South Africa remained better positioned in terms of its GDP per capita despite Nigeria’s overall GDP rising 60 percent to an estimated US $510 billion compared to South Africa’s US $350 billion.

In a subtle dig, Business Day said that Nigeria remained a far less developed economy than South Africa and its national electricity grid, for instance, wasn’t able to provide enough power to supply Johannesburg’s needs during peak hour. Glossing over the fact that South Africa’s own power utility is struggling to keep the country’s lights burning.

Even South Africa’s Ministry of Finance wasn’t really moved by the news saying in a statement that the “announcement gives concrete expression to the fact that Africa is indeed rising”. Rather than being of any concern, the ministry said it was in fact to South Africa’s benefit that Nigeria was now Africa’s biggest economy. “South Africa has been and will continue to benefit from faster economic growth in the rest of the continent,” it said.

That line was followed by Business Day which said it would be of benefit to all. This might be the case, but it misses an important communications element.